Want to see what Alabama insurance executives make? New law says that's now secret

By Amy YurkaninThe Birmingham News (AL.com), Sept. 28, 2015

If you want to know what the CEO of your health insurance company earned last year, don't ask the Alabama Department of Insurance.

That information is no longer public – because of a new law that shields much of the information used to review the state's insurance providers. The law reverses an open-book policy that had been in place for years.

Officials with the Alabama Department of Insurance sought the change during the regular legislative session – in an effort to comply with the requirements of an organization that accredits insurance regulators, said Chief of Staff Mark Fowler. The bill initially made work papers confidential, but included salaries after conversations with members of the insurance industry.

"That came from industry feedback," Fowler said. "When we offered the bill up, we agreed to go along with it. We felt like there was no real regulatory aspect of that. It didn't contribute to regulating those companies."

The bill, sponsored by state Sen. Slade Blackwell (R-Mountain Brook), enjoyed near-unanimous support in the legislature and received the governor's signature in May.

But some health insurance attorneys are concerned about the implications of the new law. In previous years, citizens had access to more information about how insurance companies spent their money. So if a member believed a rate increase was unreasonable, he could look at the documents and file a lawsuit based on that information, said Jim McFerrin, a health care attorney.

"Basically what it does is create a web of transparency so anyone who is interested can go in and take a look see at the numbers," McFerrin said.

It will be much more difficult to determine how insurance companies are spending money in the future, and more difficult to challenge rate increases, McFerrin said.

The law will benefit some companies more than others. National health insurance companies such as UnitedHealthcare and Aetna report compensation and other information in annual reports to the Securities and Exchange Commission.

Blue Cross Blue Shield of Alabama, which dominates the health insurance market in Alabama, does not report to the SEC, and is not required by the IRS to file a form that shows executive compensation.

"We kind of felt like this ought to be confidential as well since it had to do with personal information."

"We are not a charitable nonprofit required to file a Form 990, and we do not release our employees' compensation information," wrote Blue Cross spokeswoman Koko Mackin in an email.

The company's high executive pay and generous bonuses have raised questions in the past. The top ten executives at Blue Cross Blue Shield of Alabama earned more than $1 million each in 2013, according to Al.com. President and CEO Terry Kellogg earned a total of $4.84 million that year. The top executives at the company collectively doubled their compensation between 2011 and 2013.

"If they can pay the salaries in secret, God knows how much they're going to pay now," said Joe Whatley, an attorney who is leading a class action lawsuit against Blue Cross Blue Shield.

Earlier this year, the company sought 24 percent average rate increase for individual plans available on the health insurance exchange.

Although the Department of Insurance will still receive salary information for its review, the information will no longer be subject to open records law or subpoena, according to the bill.

"We kind of felt like this ought to be confidential as well since it had to do with personal information," Fowler said.

The agency needed to update its policies to comply with national standards, Fowler said. A loss of accreditation could be costly to the state's insurance companies, he said.

"If another state could not accept an examination from Alabama, that company would have to essentially pay for two examinations," Fowler said. "So it costs a lot of money and time for everybody."

Whatley said state residents have an interest in knowing what is happening at Blue Cross, which is one of the state's largest non-profits.

"Blue Cross claims all sorts of benefits from being a non-profit corporation and now it wants to keep information including the enormous salaries of its executives secret," Whatley said. "If they earn their money, they ought to be proud of their salaries."